Gold increases after finding strong support. It's traded at the 1,765 level below today's high of 1,767. Technically, this could be only a temporary rebound. The yellow metal could drop deeper if the Dollar Index jumps towards new highs.

The FOMC meeting is expected to cause a sharp movement in XAU/USD on Wednesday. The yellow metal may develop an important upside movement only if the risk-off sentiment will dominate the markets amid the COVID-19 fourth wave.

Fundamentally, a dovish Fed statement could boost the price of gold. Still, the pressure is still high as the rate stands far below a downtrend line.

XAU/USD turned to the upside

Gold failed to stabilize under 1,750.74 low and now is traded back above the median line (ml). Failing to approach the weekly S1 (1,730) signaled potential growth towards the weekly pivot point of 1,769.70.

It could come towards the downtrend line if it jumps and closes above the weekly pivot point (1,769.70). From the technical point of view, the downside movement towards the median line (ml) was somehow expected after failing to reach the upper median line (uml).

Outlook

The price action signaled that the price of Gold could try to come back higher towards the downtrend line. In the short term, it's trapped between 1,754 and 1,767 levels. An upside breakout from this pattern could bring short-term buying opportunities.

Still, a larger upwards movement will be activated by a valid breakout through the downtrend line. On the other hand, a larger drop could be activated only by a new lower low, buy a valid breakout below 1,745.